FY20 Implications of the Border Wall Funding Impasse

The video and transcript from President Trump’s Oval Office December 11th meeting with House Democratic Leader (and Speaker-designate) Pelosi (D-CA) and Senate Democratic Leader Schumer (D-NY) are startling. That meeting generated great material for a future SNL skit and increased prospects for a partial government shutdown with real consequences for millions of Americans.

The press focused on Trump’s shutdown boast.

“I am proud to shut down the government for border security,… I will take the mantle. I will be the one to shut it down.”

President Trump, December 11th

On the 2018 campaign trail, Trump repeatedly threatened a shutdown to secure funding for his $5 billion border wall initiative. That base-rallying approach was backed by House Republican Leader McCarthy (R-CA). The challenge is that implementation of Trump’s strategy requires a solution to a legislative vote math problem that gets worse in January. This Congress, Senate Republicans are at least 9 votes short of the 60 needed to approve funding for the border wall. After the elections, few of the 66 House Republicans who retired, lost their seats, or ran for other office were expected to remain in Washington for key votes. On December 19th, as many as 44 House Republicans missed votes.

Speaker-designate Pelosi insisted that the President produce the House votes for his initiative. Coming off a 2018 election victory, why would Democrats compromise with Trump before votes demonstrated that no other viable alternative existed? On December 11th, Pelosi had alternatives. After that Oval Office exchange, shutdown prospects jumped to 80%.

After the meeting, Senate Majority Leader McConnell (R-KY) assessed the situation and looked for an exit strategy. Since 1996, he has worked consistently to avoid government shutdowns. McConnell stated on several occasions that the political fallout from the 1996 and 2013 shutdowns cost Republicans dearly in subsequent elections concluding, “There’s no education in the second kick of a mule.”

McConnell knew that he lacked the 60 votes needed for Senate approval of Trump’s wall initiative and that the growing House GOP attendance problem threatened wall funding passage in the House. Opting to avoid a politically-damaging holiday shutdown, McConnell called the President’s bluff and introduced a Continuing Resolution (CR) through February 8thwith assurances from both Pelosi and Schumer that their members would support that bill and delay the border wall dispute to next year. With a White House staff signal that Trump would sign that bill, McConnell passed the measure by voice vote. That decision avoided undercutting the President on a signature issue and increased shutdown risk a bit. Moments after the CR passed the Senate, McConnell noted that the Senate would remain in session “to see what the House does with what we just sent them.”

Rather than take the Senate deal, Trump and McCarthy pressed absentee House Republicans to return to DC to pass a wall funding measure. On December 20th, the House voted 217-185 to send the Senate an amended CR with $8 billion in disaster relief and $5 billion for border security.Senate Democrats didn’t budge. They forced Vice President Pence to break a 47-47 tie on a procedural vote on the House-passed CR that was held open for hours as absent Senators returned to DC. It was no surprise to McConnell that the tally was at least 10 votes short of the 60 needed to end a filibuster and pass the bill. Afterwards, McConnell and Schumer agreed there would be no more Senate votes this Congress on the issue until 24 hours after a bipartisan, bicameral funding agreement emerged that the President would sign.

“Until President Trump can publicly commit to a bipartisan resolution, there will be no agreement before January when the new House Democratic majority will swiftly pass legislation to re-open government.”

Excerpt from Speaker-Designate Pelosi (D-CA) Letter to House Democratic Caucus, December 22nd﻿

In a December 22ndletter to House Democratic Caucus members, Speaker-designate Pelosi outlined her own deal conditions. Barring an external event, no deal is likely to pass in 2018.

Let’s focus on the operational impact of these negotiations. First, the good news—75% of the government including the Departments of Defense, Energy, Labor, and Veterans Affairs is insulated from this drama. Funded departments are exempt from a shutdown.

In 2018, Congress completed most of the work needed to finalize a $154 billion minibus appropriations package including Agriculture, Interior-Environment, Financial Services, and Transportation-Housing and Urban Development (T-HUD). Those bills were on track for completion by year-end. Washington’s two-week timeout for the President George H.W. Bush funeral, Trump’s bluff, and the Democrats’ unwavering response delay the decision timetable for those bills to February.

Three appropriations bills, Commerce-Justice-Science (CJS), Department of Homeland Security (DHS), and State-Foreign Operations, top the list of prospects for a long-term FY19 CR finalized by March. Even though the 2018 elections and recent convictions increased the intensity of Mueller investigation, census, and gun-control politics, CJS remains the most likely of the three to be finalized by mid-February. A Democrat-controlled House improves prospects that by March the $8 billion Overseas Contingency Operation (OCO) dispute at the core of the FY19 State-Foreign Operations Appropriations bill is resolved.

That leaves the FY19 DHS Appropriations bill. Given the political stakes for both sides, DHS is likely to be funded in a long-term FY19 CR at FY18 levels with a handful of anomalies. Recent history, priorities for a Democrat-controlled House and a Republican Senate majority 7 votes short of the 60 needed to move major legislation, approval of a broader FY19 DHS funding deal must include items important to both parties.

For optimists, pairing increased border security with DACA reform could deliver Congressional Democrats and President Trump signature wins within the first 100 days of the new Congress. A successful resolution to those thorny issues would boost bipartisan budget agreement prospects heading into FY20. But, with McCarthy backing Trump’s shutdown strategy, prospects for that outcome fall are falling.For realists, Trump’s willingness to force a government shutdown over a $5 billion initiative increases October 2019 shutdown prospects and budgetary uncertainty for federal agency managers bracing for a $121 billion FY20 sequester beginning October 1, 2019. Solving that problem requires bipartisan agreement and ultimately a change in law. We expect a bipartisan agreement to emerge between President Trump and Congress that will reduce but not eliminate the looming FY20 sequester. Getting there in gridlocked Washington will be a bumpy ride that takes time, drags into FY20 and creates funding and policy uncertainty for federal agencies in the second half of FY19.